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Gov. Bruce Rauner doubled down on his pitch for a state takeover of CPS;

As part of another round of cuts, CPS officials announced they would end the pension pickup for union employees and eliminate $100 million from classrooms this year; and

The Chicago Teacher’s Union said Gov. Rauner is a “madman” and CPS can’t be trusted, calling their latest actions “an act of war”.

All this comes as the district makes its second attempt to sell $875 million in general obligation bonds to pay off old debt and fund operations after an eleventh-hour decision last week to pull the offer. Details below.

Rauner Makes CPS Takeover Threat

The day after the Chicago Teachers’ Union’s Big Bargaining Team unanimously rejected a new contract with the Chicago Board of Education, and in the midst of a day-to-day bond issuance to prop up the district’s struggling budget, Gov. Rauner ramped up the pressure by again pushing a state takeover of Chicago Public Schools, telling reporters Tuesday morning he would “fight hard for it,” and was instructing the State Board of Education to plan ahead.

At a press conference on procurement reform in Springfield yesterday, Rauner said he has asked the State Board of Education to begin the selection process for an interim superintendent for Chicago Public Schools, and for the State Board to identify whether CPS meets certain financial conditions for state control. “The state should be able to take over the schools, manage those contracts properly, restructure things, and bankruptcy should be an option. There’s support for it. It’s the right thing to do. We need it around the state, and we’re going to fight real hard for it right now.”

Rauner alluded to CPS’ dire financial straits. In the past few weeks, the Board of Education has seen credit downgrades from two ratings agencies, an unusual “pulling” of its planned $875 million in borrowing, a round of administrative layoffs at its central office, and Monday’s dashed hopes of a new contract with the union.

The governor blamed CTU and the Mayor for proposing an unaffordable contract, painting it as more kick-the-can financing. “[Mayor Emanuel] was pushing off the day of reckoning and the teacher’s union still rejected that. The teachers’ union in Chicago has had complete control, they’ve been calling all the shots for decades, and it’s the reason the system there is so financially bereft, they’re so broke. I hope this rejection will wake up the Mayor, and the City Council, and the taxpayers there and around the state.”

But a state takeover would require enabling legislation from the General Assembly–something House Speaker Mike Madigan and Senate President John Cullertonhave opposed so far.

“He doesn’t have a budget, what is he going to take us over with?” CTU President Karen Lewis joked when asked about the governor’s plans by reporters later that afternoon. “Please don’t pay any attention to the ravings of a madman.”

For CTU, one of the biggest concerns is over the state’s control of charter school expansion. It was one of the major reasons why the union rejected CPS’ contract offer on Monday. The union wants put a halt to expansion and a citywide moratorium won’t cut it, according to Lewis, because charter schools can get approval from a state-run board. “The critical issue for the contract is about support for public schools, and here’s a governor that has his name on a charter school. There’s no basis for trust there,” said Jesse Sharkey, CTU Vice President.

“What is he going to do, send in the National Guard?” he quipped.

Claypool Outlines Further Cuts, Hopes to Restore Trust with CTU

Hours after Rauner’s press conference, officials from CPS held their own, saying they would work to restore trust and bargain in good faith with leaders from the union. But officials did not paint a rosier picture of the Board’s Finances. CPS CEO Forrest Claypool announced further cuts to classrooms, and said in 30 days, the district would stop putting in its 7% share of teachers’ 9% pension contribution.

“Together, the $45 million we cut from the Central Office a few weeks ago, as well as the $100 million in cuts to school budgets and the $170 million a year in savings from pensions – $315 million in total – are the serious steps we must, and will, take to close our immediate budget gap and make progress towards eliminating our structural deficit,” Claypool read from a prepared statement.

An $875 million bond deal–part of which will help patch over a cash crunch at the district–will also head back to market tomorrow, Claypool announced. At about this time last week, the deal was pulled. CPS officials denied that investors were spooked by Gov. Rauner and Republican legislators’ moves toward enabling municipal bankruptcy for CPS. Earlier this week, Mayor Emanuel paid a visit to ratings agencies to discuss Chicago finances, but budget officials said the trip was pre-planned, and not in response to CPS’ bond offering.

Claypool said he had both “good momentum” and “strong interest” from investors going into this morning’s planned pricing, and that recent announcements of cuts were meant to signal that the district is doing everything in its power to right its financial ship.

Both Claypool and Frank Clark, the President of the Chicago Board of Education, reiterated that their end of the bargain with CTU was fair. “It would have raised teachers’ pay – both for seniority and cost of living adjustments. It would have prevented teachers from being laid off due to a lack of funding. It would have provided more autonomy for teachers. And it would have restricted charter school expansion,” Claypool said.

CTU President Lewis characterized the cuts as a “retaliatory tactic” to the union’s decision yesterday to reject CPS’ contract offer. She suggested Claypool’s decision to make further cuts to the classroom in the middle of the school year further proves their point that CPS leadership cannot be trusted.

“The problem is the lack of trust. That’s what our bargaining team said,” Lewis told reporters when asked about ways the Board could address the union’s concerns.

Her comments about Governor Rauner and CPS were made at a late afternoon press conference the union called to give an official response to CPS’ newly announced cuts. “We are certain that everyone who works in our public schools is facing a clear and present danger,” she said in her opening remarks.

“CPS has a revenue problem based on debt service, those toxic swap termination payments, charter expansion and their underfunding of our pensions. This is a problem they created, not the teachers, paraprofessionals, and clinicians who work extremely hard every day under deplorable conditions,” Lewis told reporters.

The union, according to Sharkey and Lewis, believes the Board of Education is no longer bargaining in “good faith” because it announced these cuts and the decision to eliminate the so-called pension pickup for CTU members in the middle of ongoing contract negotiations. The union is seeking legal action with the state’s Educational Labor Relations Board.

If the board sides with CTU, the union would no longer have to wait out the 105-day fact-finding period required under ongoing contract negotiations and could call for a strike immediately. Lewis even joked that a significant number of her members have already bought red winter coats in preparation to strike at any time.

On a more symbolic note, Lewis announced the union would be withdrawing its money, about $1 million, from the Bank of America as a way to protest the hundreds of millions of dollars in swap agreements the district has paid out to the banks. The withdrawal is happening today. The union will also hold a rally downtown at 4:30pm today at the Bank of America on Lasalle and Adams.

TIF Surplus Moves Await Committee Action

Meanwhile, a resolution calling for a full the use of surplus Tax Increment Financing funds to offset the budget deficit at CPS will likely be called up in the Budget Committee’s meeting next Tuesday, according to Monica Trevino, Chief of Staff for the resolution’s sponsor, Ald. Carlos Ramirez-Rosa (35). The Mayor’s office told Trevino they believe it will be on the agenda. “We are just waiting to hear from Chairman [Carrie] Austin,” Trevino told Aldertrack.

Legislation in Springfield to allocate all TIF surplus funds to CPS, rather than among other local taxing bodies like Parks and MWRD, is currently sitting in the Rules Committee. Barbara Flynn Currie, the lead sponsor of the bill, is chair of the committee, but there’s no meeting currently scheduled.